London Climate Action Week (LCAW) 2026 generated far more nuanced insights into adaptation and resilience (A&R) investment than in previous years. Deeper discussions among expert investors, asset owners, insurers, pensions, bankers, and corporates as well as governments, philanthropies, and nonprofits moved the conversation beyond risk versus opportunity toward how to invest.
Three ideas have stuck with me from London.
Insurance Availability, Not Premium Level, is a Better Risk Signal
Many investors and governments have identified insurance as a potential key solution to address climate change-driven risk. This year in London, I heard one of the most interesting perspectives on how to interpret insurance signals directly from an insurance expert.
The insurance expert noted that many investors seem to refer to the level of insurance premiums as a simple proxy for asset risk: higher premiums signal higher risk. But premium levels reflect both the underlying risk of an insured asset and the competitiveness of the market itself in a specific period. In a “hard market,” insurers can charge higher profit-generating premiums regardless of underlying risk. In a “soft market,” premiums overall come down because of competitive pressure.
A better indication of risk, the expert argued, is focusing on availability of insurance. When insurers exit a market or decline to underwrite a category of assets entirely, that is a clearer indicator of underlying risk.
Consider the analogy: The nominal interest rate on a loan is an incomplete signal of risk, because that rate might reflect both the current interest rate environment and the spread determined by the riskiness of the borrower. A credit rating that specifically evaluates the borrower’s risk is a stronger signal than the nominal interest rate alone. Perhaps insurance needs a similar risk measurement that separates underlying asset risk from market conditions.
Granularity of Time is as Important as Granularity of Place
Many conversations about A&R have focused on the need for more specific data, particularly more “granular” data that downscales climate risk analysis from global or regional models to individual assets.
Lightsmith believes that granularity of time is equally important: A&R investors must also identify specifically when, and over what period, climate risk and impact will occur.
In the next stage of A&R investment, Lightsmith focuses specifically on the timing of climate risk and demand for A&R solutions – identifying the “Near Horizon”, where a shift from reactive ex post disaster recovery spending to proactive ex ante resilience investment is occurring and can be captured over a relevant investment period, such as the next three to five years for private equity. Effective A&R investment requires granularity in both space and time.
The Mustard Seed Perspective: Small Can Get Very Big, Non-Linearly
Many investors seemed to accept the inevitability and the trillion-dollar potential size of A&R investment opportunities by 2030 but noted that A&R investment today still feels early, and initial A&R investments seem small. Current tracked adaptation investment remains limited: less than 4% of all climate finance.
Yet demand and investment in adaptation and resilience can scale rapidly and non-linearly. Southern California Edison’s (SCE) wildfire management plan totaled $582 million in 2018. It is now $6.2 billion for 2026-2028.
A mustard seed measures one millimeter. In sixty days, it can grow into a ten-foot plant. SCE’s wildfire management plan grew more than 10X in less than a decade.
Billions get to trillions after millions get to billions.
